27 A revised version appears as "Analyzing Institutional Transformation in the Asia-Pacific," in Vinod K. Aggarwal and Charles Morrison, eds., Asia-Pacific Crossroads: Regime Creation and the Future of APEC (New York: St. Martin's Press, 1998), pp. 23-64. CHAPTER 2 ANALYZING INSTITUTIONAL TRANSFORMATION IN THE ASIA-PACIFIC Vinod K. Aggarwal University of California at Berkeley I. INTRODUCTION 1 The development of the Asia Pacific Economic Cooperation forum (APEC) in 1989 has been greeted with a combination of hope and skepticism. Unlike many regions of the world, regional institutions in Asia, and particularly the Asia-Pacific, have been scarce. With East Asian economic success, the end of the Cold War, and shifts in power among Asian states, many see APEC as a much-needed institution that will facilitate economic cooperation in the region. For some analysts, this institution will provide a mechanism to increase economic liberalization in the region and bolster the World Trade Organization's (WTO) efforts to reduce impediments to trade. A few have suggested that this forum could provide a means to go beyond economic issues, and foster security cooperation in the region as well. A more skeptical group of analysts views APEC as unnecessary or even as positively harmful. Some note that the Asia-Pacific region has been the most dynamic region in the world economy--in the absence of a formalized institution. For them, APEC will do little to facilitate economic growth in the region. More pessimistically, others argue that by encouraging further